Reference no: EM132842264

Assume you are a new summer intern at Fitter Snacker, working directly under the CIO. Your first job is to draft a memo using the information below, describing the poor information flow between three functional areas in the company: Marketing and Sales, Accounting and Finance, and Supply Chain Management. Focus on the lack of information flow to and from Marketing and Sales, in particular.

The issues:

• Many of Fitter's sales orders have some sort of problem, such as incorrect pricing, excessive calls to the customer for information, order-processing delays, missed delivery dates, and so on. These problems occur because Fitter has three separate information systems: the sales order system, the warehouse system, and the accounting system.
• Information from each system is shared either electronically through periodic file transfers or manually by paper printout. The high number of manual transactions creates many opportunities for data entry errors. 
•  Not all the information stored in the three systems is available in real time, resulting in incorrect prices and credit information.
• Giving a customer a handwritten price quotation. The original quotation goes to the customer, and the middle copy is first faxed and then mailed to the sales office; the salesperson keeps the bottom copy for his or her records.
• The salesperson might make an error in the sales quotation.
• Salespeople fax a copy of their sales quotations to the sales office, but sometimes a customer calls to place an order before the fax is transmitted.
• The fax received by the sales office is a copy of a handwritten form and might not be legible.
• Clerks must manually make adjustments in both the order-entry system and the accounting system for partial shipments and for any other changes that have occurred during the order-fulfillment process. Many times, these corrections are not made in both systems, causing discrepancies that must be corrected at the end of the month, at which point it is more difficult for the parties involved to remember what happened. Delayed order corrections also sometimes result in late or inaccurate invoices.

The solutions:

• An ERP system can improve a company's sales order process in several ways. Because an ERP system uses a common database, it can minimize data entry errors and provide accurate information in real time to all users. An ERP system can also track all transaction data involved in the sales order process.
• The SAP ERP Sales and Distribution module treats the sales order process as a cycle of events. SAP ERP defines up to six events for any sale: Presale activities, Sales order processing, Inventory sourcing, Delivery, Billing, Payment.
• Presales activities also include marketing activities such as tracking customer contacts-including sales calls, visits, and mailings. A company can maintain customer data in the ERP system and generate mailing lists based on specific customer characteristics, which enhances targeted marketing efforts.
• SAP ERP system creates an invoice by copying the sales order data into the invoice document. Accounting can print this document and mail it, fax it, or transmit it electronically to the customer. Accounting records are also updated at this point. To record the sale, SAP ERP debits (increases) accounts receivable and credits sales, thus updating the accounting records automatically.
• When the customer sends in a payment, this payment must be recorded in the SAPsystem. If the payment is made electronically, it can be automatically processed by theSAP ERP system, which records the payment as an electronic sales order document,debits the cash account, and credits (reduces) the customer's account balance
• With its current systems, Fitter has had a problem with getting accurate credit checks, frequently blocking orders for customers that are within their credit limit,while granting credit to other companies beyond what is advisable.
• The SAP ERP system allows a company to define various ways to group its customers and salespeople. These groupings are called organizational structures. One important organizational structure for Fitter Snacker is the Distribution Channel. With SAP ERP, theDistribution Channel allows the user to define different ways for materials to be sold and distributed to the customer. The Distribution Channel structure also allows for different types of relationships with different customers, and it lets the company specific aspects of the relationship, such as pricing, delivery method, and minimum order quantities.